A first for everything: Google shrunk in 2009

February 17, 2010

If you thought that Google (GOOG) was immune to the sluggish economy in 2009, think again. Buried deep in the 10-K that the company filed late Friday was an interesting disclosure: Google’s headcount actually shrunk in 2009 for the first time since the company has been public (and most likely for the first time ever, given Google’s growth spurt).

In the filing, the company disclosed that it had 19,835 employees at the end of 2009, compared with 20,222 at the end of 2008. That’s a modest drop of just under 2%, but a drop all the same. Digging into the numbers a bit more, it looks like the bulk of the cuts were made in sales and marketing, which makes sense, given the current economy. Just to put this into more perspective, the number of research and development employees actually rose slightly in 2009 to 7,443 from 7,254 in 2008.

Of course, in 2009 Google had a number of high-profile executive departures, including Tim Armstrong, who left to become CEO of AOL (AOL) and Dick Costolo, the former Feedburner executive who left to join Twitter as Chief Operating Officer.

It’s hard to tell from the filing whether these losses were voluntary — people leaving for start-ups, for example — or part of some organized downsizing on Google’s part. But last spring, the WSJ reported that Google executives were so concerned about a brain drain that they had designed an algorithm to figure out which of its 20,000 employees were most likely to leave. In the WSJ article, Google Human Resources manager Laszlo Block told the paper that the algorithm can “get inside people’s heads even before they know they might leave.”

Image source: Paul Sakuma/Associated Press

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